Retirement Planning

Retirement Planning Basics

(IRAs, TSP, VSP, 401K, 403b)

There are many factors to consider when developing a retirement income plan. After all, everyone has different retirement needs and goals, and your plan should reflect your own individualized requirements. Here are some retirement planning fundamentals which will help with your planning process. 

Ask the Right Initial Questions

A good start to creating a successful retirement plan involves careful analysis. Answer these questions:

  • At what age would you like to retire?
  • How much do you currently have in retirement savings? 
  • What are your current living expenses? 
  • Based on an assumed inflation rate of 3-5%, what will your future living expenses be? 
  • Do you plan on working part time? 
  • What are your post retirement goals?

You need to tailor your retirement plan to your own circumstances. Once you have determined what sort of income you will need in the future, you’ll be able to make decisions about saving, investment, and employer-sponsored or other retirement plans. Planning methods should be different for employees, executives, and business owners.

Familiarize yourself with the Social Security system, and look into post-retirement health care insurance coverage, including Medicare and long-term care insurance (LTCI). Effective retirement planning will help you feel in control of your own future, and is possible whether you are financially comfortable or have limited means.

Determining Needs and Goals

You need to evaluate your present circumstances and current financial picture:

  • Consider income, expenses, debts, assets.
  • What is your income?
  • What are your expenses?
  • What are your assets?
  • What are your debts?
  • What does your entire picture look like?

Now consider this in the context of your future circumstances as well as future living expenses. Will you continue living in your current home, or will you move to a condominium or retirement community? Do your children live nearby? Some retirees move to be closer to their families or to areas with a more desirable climate – will this be part of your future goals? 

How to Determine Retirement Age and Income Needs

There are four main sources for retirement income:

  • Social Security
  • Pensions or other retirement vehicles
  • An investment portfolio 
  • Personal savings

If your employer provides early retirement packages to its employees, you’ll need to know how to evaluate such packages from a number of perspectives. If you think your current income will not provide you with your desired retirement lifestyle, there are steps you can take now to change your circumstances.

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